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Tuesday, March 1, 2011

The Annals of Luxury: China Poised to Be No. 1 Luxury Market

Rolls Royce will soon sell more cars in China than in any other country.

The PRC already is the car maker's second biggest market after the U.S. (Britain, the United Arab Emirates, and Japan are numbers three, four, and five.)

The Chinese appetite for luxury cars appears insatiable. Sales of BMWs and Mercedes doubled last year. No small wonder, thanks to the rapid rise of the wealthy class in China.

A military parade rolls past a Gucci boutique in Beijing. (Photo: gadgetdan/flickr.com)

Forbes reports that only the U.S. exceeds China in the number of dollar billionaires. There are 130 in the PRC today. Five years ago, there were just a handful.

It's not just the ultra-rich that are thriving. The merely wealthy are doing quite well, too. The past decade saw a 50% annual increase in the number of Chinese millionaires, from 24 in 2000 to 1363 in 2010 – and most of them under 40 years old.

Vuitton boutique in Shanghai
Take a number! Patrons line up for Vuitton's Shanghai boutique

Expensive cars are just the tip of the iceberg when it comes to the super-charged Chinese luxury market.

Luxury goods companies are expanding rapidly in China to accommodate demand that will account for half of their forecasted global growth in the next 10 years, according to a study by CLSA, a leading Asian brokerage and investment group.

Before that happens, China will have become the world's largest market for luxury goods, surpassing the U.S., Europe, and Japan.

Louis Vuitton’s biggest customers are already Chinese buyers. The French firm operates 32 boutiques in mainland China. Greater China represents 28% of sales for Swatch, 22% for Richemont (owners of the Cartier and Montblanc labels), 18% for Gucci, 14% for Bulgari and 11% for Hermes.

The CLSA report says that "success, wealth and fame/social standing are highly regarded in Chinese culture and displaying this through watches, jewelry, apparel, cars and wine garner respect."

That's news? In some respects at least, it seems that the Chinese are no different than the rest of us.

Read more from the CLSA here.
See photos of Gong-Li and Lang Lang at the opening of Vuitton's Shanghai boutique here.


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